Baltimore non-profit owner pleads guilty to federal charges related to the gambling of federal funds intended for his youth focused non-profit and for filing false tax returns


Date: January 20, 2022


Baltimore, Maryland — Tyrone Sherrod, of Aberdeen, Maryland, pleaded guilty today to federal charges of wire fraud and filing a false tax return.

The guilty plea was announced by United States Attorney for the District of Maryland Erek L. Barron; Special Agent in Charge Darrell J. Waldon of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office; Special Agent in Charge Thomas J. Sobocinski of the Federal Bureau of Investigation, Baltimore Field Office; and Special Agent in Charge Bo Keane of the United States Secret Service - Baltimore Field Office.

"Sherrod gambled away federal grant funding intended to uplift Baltimore youth." said U.S. Attorney Erek L. Barron. "Our office will continue to prosecute individuals who blatantly misappropriate federal funds intended for our youth and communities and use it to line their own pockets."

According to his plea agreement, Sherrod owned and operated a non-profit that provided after-school and summer education and sports programs at a Baltimore elementary school from 2015 through 2019. In 2015, Sherrod applied for a grant funded by the U.S. Department of Education through the Maryland State Department of Education to help support those programs and was awarded approximately $1.1 million sub-program federal funding initiative to be paid over three years. The amounts to be paid each year were based on a detailed budget that accompanied the grant application. For each period, Sherrod's non-profit received a 15% advance payment. The remaining funds were reimbursed every month after Sherrod submitted payroll registers, receipts, and a detailed budget summary referred to as a Project Invoice Summary.

Between 2016 and 2018 Sherrod electronically submitted 19 Project Invoice Summaries that falsely reported a total payroll of $746,005.02. Sherrod's actual non-profit payroll during this period was $212,622.55. The falsities in the Project Invoice Summaries included the overstatement of wages earned, hours worked, and time periods of employment.

For example, on May 22, 2018, Sherrod submitted a project invoice summary for the month of April 2018. In that summary, Sherrod reported that his payroll totaled $54,200.85, when in reality, the actual payroll paid during this month was $1,000.

As stated in his plea agreement, Sherrod lost a significant amount of the grant funds intended for his non-profit gambling at casinos. For example, on March 5, 2018, Sherrod's non-profit received a $39,747.29 payment in grant funds. The same day, Sherrod wrote three checks to cash totaling $28,500. Later that day, Sherrod entered a Maryland casino and gambled using $52,270, losing $34,345.

As detailed in his plea agreement, between 2016 and 2018, during the time Sherrod's non-profit received grant funding, Sherrod incurred approximately $547,000 in gambling losses. During that same time frame, Sherrod withdrew $552,405 in cash from one casino's ATM.

Additionally, Sherrod caused the filing of a false Form 1040 Individual Income Tax Returns for the years 2016, 2017, and 2018. Sherrod hired a certified personal accountant (CPA) to prepare tax returns and provided the CPA with documents containing fraudulent statements. For example, Sherrod provided the CPA with an Employee Expense Sheet that detailed fraudulent receipts and expenses for Sherrod's work as a mentoring coach for the non-profit. Within the document, Sherrod treated himself as a contractor to influence the CPA to attach a Form Schedule C to each of the returns. Sherrod admitted that he did not inform the CPA of the grant funding. As a result of underreporting his gross receipts, Sherrod had additional tax due and owing of $148,088.

Sherrod faces a maximum sentence of three years in federal prison for filing a false tax return and a maximum of twenty years in prison followed up by three years of supervised release for wire fraud. U.S. District Judge George L. Russell has scheduled sentencing for June 17, 2022 at 2 p.m.

United States Attorney Erek L. Barron commended the IRS, the FBI, and the United States Secret Service. Mr. Barron thanked Assistant U.S. Attorneys Sean R. Delaney and Aaron S.J. Zelinsky who are prosecuting the case.